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The big picture: China wants its smart speakers in every home

Photo: Alibaba

Just like the U.S. tech industry, Chinese companies such as Alibaba and Xiaomi are racing to develop voice-command tech and put smart speakers in every home, according to a recent report from CB Insights.

Bottom line: "Cheaper speakers from Chinese companies could increasingly threaten big tech companies in the U.S. that are working on hardware, forcing them to focus on AI software development," writes CB Insights.

By the numbers: Since Q1 2017, Chinese companies have made a significant dent in the global smart speaker market.

  • By Q1 2018, Alibaba had 12% of the market, up from 0% a year earlier, and Xiaomi had 7%, also up from 0% a year prior.
  • Meanwhile, Amazon's market share shrunk from 80% to 28% over the same period, while Google's grew from 19% to 36%.

Teaming up: Big Chinese companies are also partnering with American ones to sell their devices outside of China by using their AI software like Amazon's Alexa and Microsoft's Cortana.

  • At the same time, they're tapping Chinese AI startups specializing in natural language processing and other voice tech for the products they sell domestically where American companies face barriers.

But, but, but: They'll still need data for each language they want to expand into, which means they have no immediate advantage over American companies on that front, argues CB Insights.

The bigger picture: This is just one area where Chinese tech firms are racing against U.S. companies to be first to market with technologies they are counting on to go mainstream in the near future. U.S. Big Tech still has the advantage, some experts say, but China is investing heavily to catch up.

  • "America is at a disadvantage because we are No. 1, because of complacency that goes with that," Chris Nicholson, CEO of Skymind, in which Tencent is an investor, told Axios' Steve LeVine recently. "The U.S. is still No. 1 in research but China is catching up quick. They believe it's their race to win. And I think it's our race to lose."

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